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Wells Fargo's 2018 Compliance Consent Order by OCC Terminated
OCCOptical Cable (OCC) ZACKS·2025-02-17 17:56

Core Viewpoint - The termination of Wells Fargo's 2018 consent order by the OCC marks a significant milestone in the bank's efforts to address compliance issues and improve its risk management practices [1][4]. Group 1: Consent Orders and Regulatory Actions - The latest consent order, which was terminated, was imposed in April 2018 and included a 500millionfinerelatedtoautolendingandmortgagepractices[2].−Since2019,thisisthe10thconsentorderthathasbeenclosedbyregulatorsforWellsFargo[1].−In2018,theOCCmandatedWellsFargotorestructureitsmortgagefeepracticesandcomplianceriskmanagementsystems,withsubsequentfinesforinadequateprogress[3].Group2:ManagementInsights−CEOCharlieScharfexpressedsatisfactionwiththeOCC′svalidationofthebank′scomplianceeffortsandhighlightedthetransformationofthecompanyundernewmanagement[4].−Scharfemphasizedthebank′scommitmenttocompletingtheworkrequiredinremainingconsentorderswhileaimingtobuildarespectedfinancialinstitution[4][5].Group3:ProgressandFutureOutlook−WellsFargohasmadesignificantprogressinaddressingcomplianceissues,withdetailedplansreviewedbyregulatorsforeachconsentorder[5].−Thebankisreportedlyinthefinalstagesofmeetingregulatoryrequirementstolifta500 million fine related to auto lending and mortgage practices [2]. - Since 2019, this is the 10th consent order that has been closed by regulators for Wells Fargo [1]. - In 2018, the OCC mandated Wells Fargo to restructure its mortgage fee practices and compliance risk management systems, with subsequent fines for inadequate progress [3]. Group 2: Management Insights - CEO Charlie Scharf expressed satisfaction with the OCC's validation of the bank's compliance efforts and highlighted the transformation of the company under new management [4]. - Scharf emphasized the bank's commitment to completing the work required in remaining consent orders while aiming to build a respected financial institution [4][5]. Group 3: Progress and Future Outlook - Wells Fargo has made significant progress in addressing compliance issues, with detailed plans reviewed by regulators for each consent order [5]. - The bank is reportedly in the final stages of meeting regulatory requirements to lift a 1.95 trillion asset cap imposed in 2018 due to a fake account scandal [6]. - The termination of the 2016 consent order related to unsafe sales practices is seen as a crucial step toward potentially lifting the asset cap [7]. Group 4: Market Performance - Over the past six months, Wells Fargo's shares have increased by 43.2%, outperforming the industry's growth of 33.2% [8]. - The bank currently holds a Zacks Rank 1 (Strong Buy) [10].